First Vice President's Message

Strong, Stable Performance on a Three-Legged Stool

by D. Blake Prichard, First Vice President and Chief Operating Officer, Federal Reserve Bank of Philadelphia

We sometimes represent the scope of Federal Reserve duties by a three-legged stool — a metaphor for a seat whose stability depends on the strength of each leg. In 2012, all three legs — financial services, bank supervision, and monetary policy — got their exercise, and the outlook is for continued strong performance in all functions.

In our financial services role, the Federal Reserve announced a new strategic plan for financial services to expand our role to foster integrity, efficiency, and accessibility to financial services. The strategic plan describes a partnership with industry to promote faster payments delivery and notification from initiation of payments to completion or “fulfillment,” bringing greater certainty to many transactions. The plan recognizes the significant collaboration that has occurred with industry leaders to evolve the U.S. payments system from a paper-based to a nearly all-electronic system with nearly 100 percent of checks now collected digitally. The plan continues a focus on secure financial transactions with efforts to coordinate resources in defending against cyber-attacks.

In supervision, we have seen continued improvement in banking conditions and in the health and strength of our nation’s financial institutions. Our staff performed essential work in validating models for the 2012 Comprehensive Capital Analysis and Review (CCAR), the so-called “stress tests” of top banking institutions. These tests provided an objective assessment of the capability of these institutions to weather possible economic downturns yet remain strong and viable.

Finally, in monetary policy, the Bank’s economists continue to play a key role in contributing to monetary policy through analysis of regional and national conditions. Our research publications and analyses are delivered to business and academic forums everywhere and are archived on our website to inform consumers, businesses, and academics.

Our foundation and our commitment are strong to continue the legacy of service built over nearly a century. We look ahead to celebrating that century of service as we approach that milestone in 2013. Please read more details in the Bank Highlights section that follows.